Maintenance of immune homeostasis is critical in preventing the development of allergic and autoimmune diseases. The inherent ability of the immune system to alter relative amounts of Th1 and Th2 cell types during the course of an ongoing inflammatory response to a pathogen or antigenic stimuli is an essential aspect of mechanisms that underlie immune homeostatic regulation. An area of significant interest in immunology is to understand mechanisms that instruct host immune system to alter the balance of Th1 and Th2 cells and permit rapid dynamic changes in T-helper cell repertoire in situations where host immunity requires robust Th1 or Th2 responses. In this study, we examined whether SOCS proteins contribute to regulation of cross-talk between Th1 and Th2 polarizing cytokines during Th cell differentiation and in Th cell effector functions. Our major findings are the following: 1) T-helper cell polarizing cytokines, such as, IL-4, IL-12 and IFNg, induce SOCS expression in differentiating T-cells and optimal induction of SOCS expression requires STAT1; ii) IL-4 induces STAT1 activation in T-cells and cross-talk between IFNg and IL-4 during T-cell differentiation is mediated by STAT1-dependent induction of SOCS1 and SOCS3; iii) SOCS proteins repress STAT6 activation and inhibit IL-4-induced proliferation in Th2 cells. These results indicate that cytokines that influence developmental fate of early differentiating Th cells are under feedback regulation by SOCS proteins and that homeostatic levels of polarizing cytokines in Th cell are sensitive and responsive to slight changes in steady levels of SOCS proteins. The opposing effects of STAT1 and STAT6 signaling pathways noted in this study are consistent with a model in which IL-4 has dual effects on Th cells: It simulates growth and activates cytokine-induced effector functions through STAT6 pathway and inhibits growth and attenuates cytokine signaling via STAT1-dependent up-regulation of SOCS proteins. Our study highlights the critical role played by SOCS proteins in initiating T cell functions and suggest that SOCS proteins are potential targets for therapeutic modulation of inflammatory diseases.